Speakers at January’s Room151 Monthly Online Treasury Briefing (MOTB) welcomed the recent revisions to CIPFA’s Prudential Code with some reservations that it is still too focused on commercial investments.
All three speakers in the panel session of the MOTB offered a guarded welcome to the revised code, which was announced by CIPFA on 20 December 2021.
Bevis Ingram, senior adviser (finance) at the Local Government Association (LGA), said that the LGA had yet to issue a formal response to the code, but that his view was that many of its concerns had been responded to. “Overall, I personally think that it is a big improvement on what was consulted on in November,” he said.
Ingram highlighted the clarification that local authorities would not be forced to undertake a “fire sale” of commercial property investments to abide by the code. He confirmed that the LGA would respond formally once its resources board has met in March.
David Green, strategic director at Arlingclose, referenced the amended wording in the code that allows local authorities to restructure debt to save money and the removal of suggestions that every authority, including fire authorities, could require a separate treasury management committee.
“In this instance, CIPFA really have listened. This is the third version after the two consultation drafts and there are a lot of differences – all from feedback from authorities.”
22 March 2022
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Missed opportunity to widen the code
Dan Bates, finance specialist from LG Improve, said he welcomed the fact that CIPFA had “pulled back from some of the more extreme views that were in the consultation particularly around commercial investments and the need to sell those”.
However, he still thought there was a “missed opportunity” to widen the scope of the code, which currently focuses heavily on commercial property investments.
“Commercial properties should be well managed, and there should be measures to show that. But so should housing projects, so should climate emergency projects, which are just as fallible to failure as well. The principles should be applied across the board.”
The other speakers at the session were: Eoin Murray, head of investment, Federated Hermes; Iain Buckle, head of credit UK, Aegon Asset Management; and Sidhant Mehta, fund manager, CCLA Investment Management.
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